6 Organizational StructureWork specialization - dividing work activities into separate job tasksEarly proponents of work specialization believed it could lead to great increases in productivityOverspecialization can result in human diseconomies such as boredom, fatigue, stress, poor quality, increased absenteeism, and higher turnover.

8 DepartmentalizationDepartmentalization - the basis by which jobs are grouped togetherFunctionalGrouping jobs by functions performedProductGrouping jobs by product lineGeographicalGrouping jobs on the basis of territory or geographyProcessGrouping jobs on the basis of product or customer flowCustomerGrouping jobs by type of customer and needs

12 Departmentalization TrendsIncreasing use of customer departmentalizationCross-functional team - a work team composed of individuals from various functional specialties

13 Chain of CommandChain of Command - the continuous line of authority that extends from upper levels of an organization to the lowest levels of the organization—clarifies who reports to whom

14 AuthorityAuthority - the rights inherent in a managerial position to tell people what to do and to expect them to do it.Acceptance theory of authority - the view that authority comes from the willingness of subordinates to accept it.

15 Authority (cont.)Line authority - authority that entitles a manager to direct the work of an employeeStaff authority - positions with some authority that have been created to support, assist, and advise those holding line authority

21 Centralization and DecentralizationCentralization - the degree to which decision making is concentrated at upper levels of the organizationDecentralization - the degree to which lower-level employees provide input or actually make decisionsEmployee empowerment - giving employees more authority (power) to make decisions

23 FormalizationFormalization - the degree to which jobs within the organization are standardized and the extent to which employee behavior is guided by rules and procedures.Highly formalized jobs offer little discretion over what is to be done.Low formalization means fewer constraints on how employees do their work.

26 Contingency Factors Affecting Structural ChoiceStrategy and StructureChanges in corporate strategy should lead to changes in an organization’s structure that support the strategy.Certain structural designs work best with different organizational strategiesThe organic structure works well for organizations pursuing meaningful and unique innovationsThe mechanistic organization works best for companies wanting to tightly control costs

27 Contingency Factors (cont.)Size and Structure - as an organization grows larger, its structure tends to change from organic to mechanistic with increased specialization, departmentalization, centralization, and rules/regulations.

28 Contingency Factors (cont.)Technology and StructureOrganizations adapt their structures to their technology.Woodward’s classification of firms based on the complexity of the technology employed:Unit production of single units or small batchesMass production of large batches of outputProcess production in continuous process of outputs

35 Review Learning Outcome 11.3Discuss the contingency factors that favor either the mechanistic model or the organic model of organizational design.Structural decisions are influenced by:Overall strategy of the organizationSize of the organizationTechnology use employed by the organizationDegree of environmental uncertainty